Thursday 24 April 2014 08.54 EDT
First published on Thursday 24 April 2014 08.54 EDT

AstraZeneca suffered one of the biggest shareholder revolts over executive pay yesterday when 40% of those voting at the pharmaceutical group's annual general meeting failed to back its remuneration report.

The company suffered further blows at the meeting when 31% failed to back its proposed pay policy for the next three years and 43% voted against the re-election of Jean-Philippe Courtois, a non-executive director on its audit committee, after he failed to turn up for board and audit committee meetings.

The revolt against the remuneration report came after chief executive Pascal Soriot's basic pay was increased by 3% to £1.13m for the current year while he could earn a further £4.35m in share and cash bonuses. Soriot's predecessor, David Brennan, was ousted in the shareholder spring of 2012 after a row over his £9m 2011 pay deal and underperformance at Britain's second biggest drugmaker.

Pirc, the shareholder advisory body, which said investors should vote against AstraZeneca's remuneration report, appeared to give a warning to other companies considering hefty director pay deals. A spokesman said: "Pirc is concerned about the general level of remuneration and some of the remuneration structures at large companies and we will continue to oppose excessive remuneration policies."

Investors have become markedly more active in expressing their disapproval of executive pay with a string of revolts since spring 2012 that as well as forcing out Brennan claimed the scalp of Andrew Moss at insurance company Aviva.

A spokesperson for AstraZeneca said: "We are disappointed with today's vote and it is our priority to carefully analyse it and talk to our shareholders to fully understand any concerns.

"We held a consultation meeting with our major shareholders in December 2013 at which we outlined our approach to our remuneration policy. Prior to today's vote we have had only limited active feedback from shareholders on the topic of remuneration in the run-up to the AGM."

AstraZeneca shares rose 3.3% to £41.75 on Thursday. The rebellion came as Soriot fired a warning shot across the bows of bigger US rival Pfizer, a potential suitor, as he insisted that the British drugmaker's strategy was working and highlighted progress with new cancer drugs.

AstraZeneca is said to have received a tentative $100bn approach from Pfizer, the world's largest drugmaker. While Soriot did not comment directly on the bid, he said that "large mergers and acquisitions sometimes can work but often are very disruptive". He lauded the multibillion-dollar asset swap unveiled by GlaxoSmithKline and Switzerland's Novartis on Tuesday as a "win-win for both companies", adding: "It is certainly the kind of thing we ourselves are considering."

The future of AstraZeneca's antibiotics and neuroscience divisions is under review as analysts predicted that the group could raise $15bn from a disposal programme. "What you are likely to see from us is a continued focus on what we do well … We can't do everything ourselves. There are a variety of options open to us which we are studying right now," Soriot said.

The drugmaker is moving four important products into late-stage clinical testing, two for cancer and two for breathing disorders, including the first of its closely watched immunotherapy cancer treatments.

AstraZeneca sales in the first quarter rose 3% to $6.42bn at constant exchange rates – the first quarterly sales growth in over three years – with revenues in China surging 22%. But pre-tax profits fell 18% to $1.82bn, and by 13% at constant exchange rates. AstraZeneca still expects a single digit percentage decline in 2014 sales as competition from cheap generic medicines will hurt sales of its top-selling heartburn pill Nexium in the US from May.

Mick Cooper, analyst at Edison Investment Research, said: "These numbers highlight why the interest [from Pfizer] is there. AstraZeneca has been in transition, with much business and product development under way but little as yet is really visible. We think AstraZeneca will return to growth faster than many believe, which underlines Pfizer's opportune timing."